Investors seeking steady passive income could consider investing in dividend-paying companies. There are several fundamentally strong Canadian companies that have been consistently rewarding their shareholders with regular dividend distributions, irrespective of the volatility in the market.
The reliability of their payouts, solid financials, and a growing earnings base make these Canadian stocks dependable investments to earn worry-free passive income.
Against this backdrop, let’s look at two solid Canadian stocks that could generate a passive income of over $863 per year with an investment of $20,000.
Fortis
Investors planning to start a passive-income stream could consider adding a few top-quality companies from the Canadian utility sector. Utility stocks are famous for their resilient dividend payments owing to their regulated earnings base. With the Canadian utility sector, Fortis (TSX:FTS) stock stands out for its stellar distribution history and visibility over future payouts.
Fortis has consistently increased its dividend for over 50 years. This impressive track record is supported by a defensive business model, predictable cash flows, and a growing rate base. Since Fortis derives all its earnings from regulated utility businesses, its quarterly payouts are reliably covered.
The company’s strategic focus on expanding its rate base through ongoing investments in regulated utility assets will likely be the key driver for future earnings and dividend growth. Fortis plans to grow its rate base by approximately 6.3% annually through 2028. This will enable Fortis to enhance shareholder returns via increased dividend payments. The company projects its dividends to grow by 4-6% annually over the same period.
In summary, Fortis’s outstanding dividend payment history, low-risk business model, expanding rate base, and visibility of future payouts make it an ideal stock for generating passive income. It offers a worry-free yield of about 4.3%.
Canadian Natural Resources
Investors looking for reliable stocks for passive income could consider leading Canadian energy companies, particularly those known for their dependable dividend payments and growth potential. One among them is Canadian Natural Resources (TSX:CNQ). This oil and gas giant is renowned for its robust dividend payment and growth. In addition, it offers solid growth potential for investors in the long term.
Canadian Natural Resources has an impressive track record of increasing its dividends. The company has consistently increased its dividends for 24 years at a compound annual growth rate (CAGR) of 21%. The resiliency of its payouts and high growth reflects the company’s commitment to rewarding its shareholders with higher cash returns, making it an attractive option for investors seeking steady income.
At current levels, Canadian Natural Resources offers a decent dividend yield of 4.4%. Beyond its attractive dividend, Canadian Natural Resources has delivered solid capital gains. Its stock has surged over 272% in five years, delivering an above-average return.
Canadian Natural Resources’s diversified and long-life asset base, high-value reserves, and low maintenance capital requirements will likely drive its earnings and cash flows. Additionally, the company’s disciplined capital-allocation strategy and strong balance sheet will further support its growth initiatives and future dividend payments.
Bottom line
Both Fortis and Canadian Natural Resources stocks are dependable investments for earning worry-free passive income. The table below shows that an investment of $10,000 in each stock can help you earn over $215.9 every quarter, or about $863.6/year.
| Company | Recent Price | Number of Shares | Dividend | Total Payout | Frequency |
| Fortis | $55.51 | 180 | $0.59 | $106.2 | Quarterly |
| Canadian Natural Resources | $47.81 | 209 | $0.525 | 109.7 | Quarterly |
